mid-year market and economic update

Mid-year Market and Economic Update

Iftikhar Ahmed, APMA® | Principal Advisor

2105 South Bascom Ave, Suite 295Campbell, CA 95008

Phone: 408-819-9010 www.kfstrategies.us

Saadia Ahmed, CFP®, CMFC® | Principal Advisor

July 15th, 2021

• The stock market has rallied significantly over the past year.• Despite reaching many new all-time highs, markets have been uncertain due to inflation and interest rates.• For long-term investors, it is important to maintain the proper perspective and look past short-term volatility.

• Developed markets have recovered alongside many other regions since the pandemic-induced market crash.• However, they still trail the U.S. market due to significant uncertainties from the dollar, rates and COVID-19.• Many countries, especially those in Europe, continue to face challenges with vaccine rollouts.

• Emerging markets are slowly recovering from the pandemic and catching up to other regions.• Even before the pandemic, the asset class had been volatile over the past decade due to growth concerns.• Longer term, emerging markets still play a very important role in portfolio diversification despite recent uncertainty.

• Stock market sector leadership has shifted multiple times throughout the early phases of the bull market.• Technology-driven sectors initially led the pack but commodity-sensitive, consumer and rate-sensitive sectors have

risen more recently.• Most investors should continue to benefit from broad diversification across sectors and industries.

• This chart shows the S&P 500 index alongside its trailing 12 months earnings-per-share.• Over the long run, the stock market tends to follow earnings. If earnings are rising, investors are willing to pay more per share.• Earnings, in turn, tend to track economic growth. Thus, a healthy economy tends to result in a rising stock market.

• Household net worth is at record levels, despite the recession, eclipsing the pre-recession high of about $70 trillion.• U.S. net worth grew from stock market returns, low interest rates, rising home prices, and steady economic growth.

• Household debt has increased but is not at levels seen during the housing bubble.• Low interest and mortgage rates have helped to keep household debt levels manageable.

• Housing starts have accelerated due to strong demand and limited supply of housing.• Housing prices continue to rise alongside broader measures of inflation.

• This chart shows the total jobs created since the year 2000.• Over 22 million jobs had been created since 2010.• At this point, more than two-thirds of the jobs lost during the pandemic have been recovered.

© 2020 Clearnomics, Inc

Market and Economic Chartbook

Inflation• Economic recovery seems steady, albeit slow• The housing market is at all time high• Fear of inflation has pushed market volatility higher• Price increases have been driven by increased demand and reduced supply,

especially in lumber and copper • There is an upward pressure on wages due to labor shortages• Wage inflation differs from increase in prices of goods and services



Biden Administration Tax Proposals

• U.S. corporate income tax rate would increase from the current 21% to 28%

• The individual tax rate would increase from 37% to 39.6% for AGI > $400,000+

• SS tax, which phases out at $142,800 of income in 2021, would resume at $400,000

• The estates of taxpayers would recognize a deemed sale of all appreciated assets when they die, with a corresponding deduction allowed for federal estate tax purposes

• The administration would also tax long-term capital gains and qualified dividends at the ordinary income tax rate of 39.6% for income above $1 million

• Like-kind exchanges under Section 1031 of the Internal Revenue Code would be limited to $1 million of gain / year / taxpayer

• The deduction for unlimited state and local taxes (SALT), would be restored



Q & A



This presentation is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Kaizen Financial Strategies, LLC unless a client service agreement is in place. Please contact us at your earliest convenience with any questions regarding the content of this presentation and how it may be the right strategy for you.

For actual results that are compared to an index, all material facts relevant to the comparison are disclosed herein and reflect the deduction of advisory fees, brokerage and other commissions and any other expenses paid by Kaizen Financial Strategies, LLC's clients. An index is a hypothetical portfolio of securities representing a particular market or a segment of it used as indicator of the change in the securities market. Indexes are unmanaged, do not incur fees and expenses and cannot be invested in directly.

Kaizen Financial Strategies, LLC Disclosures

mid-year market and economic update

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